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Morning Market Report

Feb 25, 2014

Morning Market Report

The ASX is at its strongest point since 2008.

The market is up 16 points.

The Dow Jones was up 106 points at 16,209 — The market rose strongly in early trade and drifted lower throughout the day, trading in a 200 point range.

There was little in the way of economic drivers. The market was lsupported by M& A activity, where RF Micro Devices agreed to acquire TriQuint Semiconductor for around $1.6 billion and Men’s Wearhouse increased its offer for Jos. A. Bank Clothiers. Healthcare stocks were also supported by lower than previously thought cuts to Medicare.

The S&P rose 14 points to 1851.

Oil rose 0.56% to US$102.75. 

Gold rose US$13.10 to US$1,336.70 per ounce.

The US$ was slightly lower against most major currencies in quiet trading and the Australian dollar was stronger, currently trading at US90.31.

VIX Index fell 3.75% to 14.13.

US treasury markets were slightly stronger — The yield on the 10 year bond fell one basis point to 2.746%.

European shares were generally stronger — The UK FTSE rose 0.54%, the French CAC rose 0.87% and the German DAX rose 0.54% after strong business sentiment data.

European bonds were mixed — The yield on the Euro 10 year bond yield rose two basis points to 1.679% and the UK 10 year bond yield was two basis points lower at 2.776%.

Base metal prices were weaker — Copper fell 1.07%, lead fell 0.96% and aluminium was 0.52% lower. Zinc rose 0.29%.

Iron ore fell US$2.50 to US$119.90 a tonne.


  • Atlas Iron (AGO) — half year underlying profit of $61.2 million up from a loss of $10.4 million last year. The result was slightly above a consensus forecast of $59 million. First half net profit of $73.7 million. Interim dividend of 3c. The miner said it will consider capital management initiatives. Mt Webber expansion to 6Mtpa approved.
  • Austbrokers (AUB) — NPAT of $12.8 million. Underlying profit of $14.6 million up 6.2% but below an expected $16.0 million.  Dividend was increased to 12c.
  • Charter Hall (CHC) – 1H Net Profit of $28.6m down 4.3% which was below an expected $39.2m. The company sees FY operating earnings growth of 7-9%. Interim Distribution 11c. The company has also announced a $140m equity raising.
  • IOOF Holdings (IFL) – Underlying NPAT of $58m up 14% but below an expected $61.1m. NPAT was $48.2m. Interim dividend of 22.5c. Total funds now $124.0 billion and total net flows are positive for the 2nd consecutive half. Outlook —  the company said “For the IOOF business, fewer regulatory headwinds will also allow us to pursue value adding activities for our clients and shareholders alike.”
  • QBE — Cash profit of $761 million compared with $US1.042 million previously. The figure was in line with guidance. The lower figure differed from their December announcement due to the foreshadowed one-off FPS restructuring costs being deemed ‘cash’ rather than ‘non-cash’ items. Financial year net loss of $US254 million due to large one off costs. QBE forecasts 2014 Net Earned Premiums of $Us14.7 billion-$US15.2 billion, 22014 insurance profit margin of 10% and gross written premiums of $US16.8 billion-$US17.3 billionn. Final Dividend 12c.
  • Ramsay Health Care (RHC) — Upgrades earnings guidance – first half net profit of $157.8 million core profit before items was $171.6 million up 15.8% and above an expected $161.1 million. Interim dividend 34c. Revenue was up 13.9% to $2.4 billion. RHC previously forecast Underlying Earnings Growth of 12%-14%. They now see full year underlying earnings to be between 16%-18%.
  • Cabcharge (CAB) – Reported net profit after tax of $36.0 million up 8% and in line with a broker consensus forecast of $34.4 million. Interim dividend of 15c down from 18c. Revenue increased to $103.3 million up 3.5%. Positive outlook for long term growth.
  • Mermaid Marine (MRM) — NPAT of $24.2 million down 25.5% but it was in line with $22.6 million profit forecast. Interim dividend of 5.5c.
  • Oil Search (OSH) — Shares in trading halt pending an announcement of an acquisition.
  • AWE — half year profit of $10.8 million which was lower than an expected $18.4 million. Statutory NPAT of $81.7 million. Production of 3.0 million BOE, up 28%. Sales revenue of $175 million, up 21%. Growth projects on track –goal to double production & triple cash flow in 3-5 years.

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